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PETITIONER: STATE OF TAMIL NADU AND ORS.

       Vs.

RESPONDENT: NELLAI COTTON MILLS LTD. AND ORS.

DATE OF JUDGMENT20/03/1990

BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) FATHIMA BEEVI, M. (J)

CITATION:  1990 SCR  (2)  33        1990 SCC  (2) 518  JT 1990 (2)    19        1990 SCALE  (1)633

ACT:     Labour  and Services: Tamil Nadu  Industrial  Establish- ments (Conferment of permanent status to workmen) Act, 1981: Sections  2 and 3--Permanent status as workmen--Con  ferment of--Judicial interpretation-Acceptance of by Legislature.     Practice  and Procedure: Statutes--Judicial  interpreta- tion of-Legislative approval or disapproval--Court to  study the subsequent action or inaction of the Legislature.

HEADNOTE:     In  order to confer permanent status to workmen in  var- ious industrial establishments, who have put in a continuous service for a period of 480 days in a period of 24  calendar months, the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 was passed by  the State Government. The constitutional validity of the Act was challenged  before  the  High Court  by  various  industrial establishments  by  way of writ petitions.  The  High  Court allowed  the  writ  petitions in part,  striking  down  some portions of section 3 of the Act.     The  State  Government  preferred  appeals  against  the judgment  of the High Court. Meanwhile, the  Appellant-State amended the Act in the light of the High Court’s judgment.     On  behalf of the appellant, it was contended  that  the view taken by the High Court as to the scope of section 3(2) has to be determined notwithstanding the,amendments made.     The contention of the respondents was that the  legisla- ture  while amending the Act with retrospective  effect  has accepted the judgment of the High Court, since the amendment has  not given a different meaning to section 3(2) from  the one asserted by the High Court. Dismissing the appeals, this Court, HELD: 1. When an Act has been judicially interpreted, Courts 34 may study the subsequent action or inaction of the  legisla- ture for clues as to legislative approval or disapproval  of the  judicial  interpretation. After the  statute  has  been judicially interpreted in a certain way and if the  legisla- ture  by  taking note of the judgment  amended  the  statute appropriately so as to give it a different meaning from  the one  asserted  by the Courts, or not  giving  any  different meaning  from the view taken by the Court, it may be  argued

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with  some justification that the legislature has  expressly or  by  implication ratified  the  judicial  interpretation. [38G-H; 39A]     2.  In the instant case, the legislature  has  expressly taken note of the High Court verdict and removed the practi- cal  difficulties caused thereby in implementing the  provi- sions  of the Act, by appropriate amendments. No  provision, however,  was inserted to re-write and validate the  portion which  was struck down by the High Court. It  could,  there- fore,  be reasonably held that the legislature has  accepted the  judgment  of the High Court to  the  extent  indicated. [39A-B]     3.  The view taken by the High Court in striking down  a portion  of sub-section 2 of section 3 of the Act cannot  be found  fault with. The word ’non-employment’  would  include retrenchment  as well and a person whose services have  been terminated  or  discharged albeit illegal cannot at  all  be said  to  be a person in service, much  less  in  continuous service.  Therefore,  the period of  non-employment  or  the period  after discharge cannot be accounted for the  purpose of  giving  continuity of service. If the discharge  is  set aside and workmen is reinstated by process known to law  the workman automatically gets continuity of service. No special provision is necessary for such purposes. [39C; E-F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  3222- 3241 of 1988. From the Judgment and Order dated 5.2.1981 of the Madras High  Court  in W.P. Nos. 59 18, 67 12,  7495,  7496,  7591, 8623,  8624  and 9088 of 1982, 502, 503, 1336,  2433,  3460, 3596,  3846, 6797, 8859, 104 18, 104 19 of 1983 and 5888  of 1984. V. Krishnamurthy for the Appellants.     P.  Chidambaram,  A.S. Nambiar, Smt.  Shanta  Vasudevan, P.K. Manohar, M.N. Krishnamani, Sunder Rao, Diwan Balak Ram, C.S.  Vaidyanathan,  S.R. Setia and K.V. Mohan for  the  Re- spondents. 35 The Judgment of the Court was delivered by     K.  JAGANNATHA  SHETTY,  J. The  Tamil  Nadu  Government passed  an Act called the Tamil Nadu  Industrial  Establish- ments (Conferment of Permanent Status to Workmen) Act,  1981 ("The Act") which came into force on 1st January, 1982.  The Act  was  to confer permanent status to workmen  in  various industrial establishments who have put in continuous service for  a period of 480 days in a period of 24 calendar  months in  an  industrial  establishment. Section 3  is  a  crucial provision in the Act. It reads as under: "Sec. 3. Conferment of permanent status to workmen-- (1)  Notwithstanding anything contained in any law  for  the time  being  in  force every workman who  is  in  continuous service  for a period of four hundred and eighty days  in  a period  of  twenty-four  calendar months  in  an  industrial establishment shall be made permanent.           (2)  A workman shall be said to be  in  continuous service for a period if he is, for that period, in  uninter- rupted  service, including service which may be  interrupted on account of sickness or authorised leave or an accident or a  strike, which is not illegal, or a lockout or on  account of non-employment or discharge of such workman for a  period which does not exceed three months and during which period a substitute  has been employed in his place by the  employer,

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or a cessation of work which is not due to any fault on  the part of the workman.           Explanation  For the purposes of this section  the number of days on which a workman has worked in an industri- al establishment shall include the days on which (i) he has been laid-off under an agreement or as  permitted by  standing  orders made under  the  Industrial  Employment (Standing  Orders)  Act, 1946 (Central Act XX  of  1946)  or under any other laws applicable to the industrial establish- ment; (ii)  he  has been on leave with full wages, earned  in  the previous years; 36 (iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his  employ- ment; and (iv)  in  the case of a female, she has  been  on  maternity leave, so, however, that the total period of such  maternity leave does not exceed twelve weeks."’     The constitutional validity of the Act was challenged in a  batch of writ petitions by various industrial  establish- ments  before the High Court of Madras. The High  Court  has allowed  the writ petitions in part holding, inter alia,  as follows: "The  Explanation to section 3 is incapable  of  enforcement and must therefore be held to be redundant. (2)  The  provisions of Section 3(2) of the  Act  are  valid except  that the ’clause or on account of non-employment  or discharge of such workman for a period which does not exceed three  months and during which period a substitute has  been employed in his place by the employer’ is void on the ground that it amounts to an unreasonable restriction on the  right of the employer. (3) An apprentice or a badli worker could not be included in the  ’workman’  referred to in section 3(1) and (2)  of  the Act, and they will, therefore, be not entitled to the  bene- fit of section 3. (4)  The  Act will not supersede a  settlement  between  the workers  and  the employer in so far as it  deals  with  the subject of conferment of permanent status to workman. (5)   The  Act  cannot  be  held  to  be  retrospective   in character."     On 7th July 1985, the State of Tamil Nadu preferred this appeal  challenging the judgment of the High  Court.  During the  pendency  of  the appeal, the State  also  amended  the principal Act in order to obviate the practical difficulties in  implementing the provisions of the Act by reason of  the judgment of the High Court.     The  relevant  portion of the Amending Act  44  of  1985 reads as under: 37 "2.  Amendment  of section 3, Tamil Nadu Act 46  of  1981-In section  3  of  the  Tamil  Nadu  industrial  Establishments (Conferment of Permanent Status to Workmen) Act, 1981 (Tamil Nadu Act 46 of 1981) (hereinafter referred to as the princi- pal Act)-- (1)  in the Explanation, for the opening  portion  beginning with the words "for the purposes of this section" and ending with  the words "include the days on which",  the  following shall be substituted, namely-- "For  the purposes of computing the continuous  service  re- ferred  to in sub-sections (1) and (2), a workman  shall  be deemed  to  be  in continuous service  during  the  days  on which--"; (2)  the Explanation shall be numbered as Explanation I  and

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after  Explanation I as so numbered, the following  Explana- tion shah be added, namely:-- "Explanation  II--For  the purposes of this  section,  ’law’ includes  any  award, agreement, settlement,  instrument  or contract  of service whether made before or after  the  com- mencement of this Act.     The Amending Act also contains provision for  validation in the following terms: "3.  Validation--Notwithstanding anything contained  in  any judgment,  decree or order of any court or other  authority, all acts done or proceedings taken in pursuance of section 3 (including the Explanation) of the principal Act at any time on or after the 1st day of January 1982 and before the  date of  publication  of this Act in the  Tamil  Nadu  Government Gazette in relation to every workman in an industrial estab- lishment  for the purpose of conferment of permanent  status to  such workman by any officer or authority shall, for  all purposes, be deemed to be, and to have always been,  validly done or taken in accordance with law as if section 3 of  the principal  Act as amended by this Act had been in  force  at all  material times when such acts or proceedings were  done or taken". 38     Mr.  Chidambaram  learned counsel  for  the  respondents argued that the Legislature while amending the principal Act with retrospective effect and also validating the acts  done and  proceedings  taken under the principal Act  appears  to have  accepted the judgment of the High Court so far  as  it relates  to  the  offending portion in  sub-section  (2)  of section 3, since no different meaning has been given to that portion from the one asserted by the High Court. But counsel for  the  appellant argued that the view taken by  the  High Court as to the scope of sub-section (2) of section 3 has to be  determined notwithstanding the foregoing amendments.  He claimed that non-employment or discharge of any workman  for a  period  which does not exceed three  months,  and  during which period a substitute has been employed in his place  by the  employer  was intended to cover such  cases  where  the employer  deliberately  discharges  a workman  in  order  to effect  a  break in service and again re-employs  him  as  a fresh candidate without continuity of service.     We  may first examine whether there is  legislative  ap- proval of the High Court decision to the extent indicated by Mr. Chidambaram for the respondent. The Statement of Objects and  Reasons accompanying the Amending Act 44 of 1985  reads as follows: "STATEMENT TO OBJECTS AND REASONS The  Tamil  Nadu Industrial  Establishments  (Conferment  of Permanent Status to Workmen) Act, 1981 (Tamil Nadu Act 46 of 1981)  has been enacted with a view to provide for the  con- ferment  of  permanent status to workmen in  the  industrial establishments  in the State of Tamil Nadu. The judgment  of the Madras High Court rendered in a batch of Writ  Petitions (Nellai  Cotton  Mills Ltd. Tirunelveli v.  State  of  Tamil Nadu,  (Writ Petition No. 5910 of 1982 etc.) had given  rise to certain practical difficulties in implementing the provi- sions  of the said Act. It has, therefore, been  decided  to amend  section 3 of the said Act to remove the  difficulties caused by the said judgment and confer the intended benefits on workmen. 2. The Bill seeks to achieve the above object."     When the Act has been judicially interpreted, Courts may study the _subsequent action or inaction of the  legislature for  clues  as  to legislative approval  or  disapproval  of judicial  interpretation. After the statute has  been  judi-

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cially  interpreted in a certain way and if the  legislature by taking note of the judgment amended the statute appro- 39 priately  so as to give it a different meaning from the  one asserted by the courts, or not giving any different  meaning from the view taken by the court, it may be argued with some justification  that  the  legislature has  expressly  or  by implication  ratified  the judicial interpretation.  In  the instant  case, the legislature has expressly taken  note  of the  High Court verdict and removed the practical  difficul- ties  caused thereby in implementing the provisions  of  the Act,  by appropriate amendments. No provision, however,  was inserted  to  re-write and validate the  portion  which  was struck  down by the High Court. It could therefore, be  rea- sonably held that the legislature has accepted the  judgment of the High Court to the extent indicated.     That apart, the view taken by the High Court, in  strik- ing  down  a  portion of sub-section (2),  in  our  opinion, cannot  be  found fault with. Sub-section (2) of  section  3 consists of three parts. The first part refers to  interrup- tion of service including service which may be  interruption on account of sickness or authorised leave or an accident or a strike which is not illegal or a lockout. The second  part Consists  of the portion which has been struck down  by  the High  Court as unreasonable restriction on the right of  the employer.  The third part refers to cessation of work  which is  not  due to any fault on the part of  the  workmen.  The provisions  under the first and the third parts seem  to  be similar  to the terms of section 25B of the Industrial  Dis- putes Act which also provides for continuous service of  the workman.  The  second part dealing with  non-employment  and discharge  of a workman is distinct from the first  and  the third  parts. It refers to the period during which there  is no  subsisting relationship of master and servant. We  agree with  the  High Court that the word  ’non-employment’  would include  retrenchment  as well and a person  whose  services have been terminated or discharged albeit illegal cannot  at all be said to be a person in service. much less in continu- ous service. Therefore, the period of non-employment or  the period after discharge cannot be counted for the purpose  of giving continuity of service. If the discharge is set  aside and workman is reinstated by process known to law the  work- man  automatically  gets continuity of service.  No  special provision is necessary for such purposes.     In  any view of the matter we cannot  therefore,  accept this appeal and is accordingly dismissed. In the circumstances of the case, however, we make no  order as to costs. G.N.                                      Appeal dismissed. 40